Finance Ministry proposes 2010 budget

The draft 2010 budget envisages revenues of HRK 112.8 billion, 1.5 per cent more than this year, while expenditures are planned at HRK 121.4 billion kuna, an increase of 900 million from this year, Finance Ministry officials told a press briefing on Friday.

The proposal will be discussed by the government on Saturday and will be sent to parliament for adoption.

The Finance Ministry projected a real GDP growth rate of 0.5 per cent and a general government deficit of 2.7 per cent of GDP. By comparison, this year's deficit is 2.9 per cent.

Ministry officials said that budget spending in the next year would be considerably rationalised, stressing that the increased expenditures were due to three important elements -- adjustment to EU standards, which will cost HRK 2 billion in 2010, co-funding of projects within EU pre-accession programmes, for which HRK 432.2 million has been planned, and an increase in interest costs of about HRK 1 billion.

Of HRK 2 billion planned for projects relating to adjustment to the EU, HRK 648.4 million will go towards care for returning refugees, HRK 502.6 million towards the adjustment of the agricultural sector, HRK 234.7 million towards the establishment and management of the Schengen system, and HRK 111.8 million towards judicial reform.

Officials said that all budget beneficiaries had been asked to cut costs wherever possible.

On the expenditure side of the budget, the expenditure for subsidies would be reduced by HRK 1.2 billion, or 17.6 per cent, to HRK 5.7 billion.

The expenditure for salaries would be HRK 22.5 billion, 0.6 per cent higher than this year, while the expenditure for pensions would be increased by 1.7 per cent to HRK 34.6 billion.

Officials said they were aware there were no possibilities for increases on the revenue side of the budget, reiterating that "painful and hard decisions" would have to be taken regarding the shipbuilding industry, subsidies, and rationalisation of local government units.

About HRK 2.15 billion in liabilities are scheduled to mature next year, including bonds in the amount of HRK 3 billion and EUR 500 million, and a EUR 1.25 billion loan.

Officials said that all maturing foreign liabilities would be financed on the international financial market, while all maturing domestic liabilities would be met on the domestic market.